Our pick of the best P2P loans
This post is part of a regular series where we highlight what we think are some of the best P2P loans available in the UK and Europe. These loans may sell out very quickly. Even if they do, it is likely that similar opportunities are available on each platform.
Our goal is to help highlight the types of opportunities that are available on various platforms, and which types of loans offer the best balance of risk and reward.
Why we like it
Interest rate: 10%
Term: 43 months
1st lien mortgage
This mortgage loan is available on Viventor. We think this loan in particular is interesting because it offers both a very low LTV of 26%, and a ‘buyback guarantee’ from the lender Lenno. We continue to think that the Lenno loans are the top picks on Viventor right now. Investors get the benefit of the loan collateral and also a buyback guarantee, which is rare. Lenno received one of the highest scores in our recent Viventor lender ratings. One final positive characteristic of this loan is the payment history of the borrower. The loan was originated 17 months ago and in that time they have made all their monthly payments and paid down the loan principal by more than 20%.
Interest rate: 14%
Term: 42 months
We think that Mogo loans offer some of the best value on Mintos currently. Interest rates had been as low as 10% not too long ago but now loans like this can be found at 14%. We think that is a very strong yield given that Mogo’s corporate bonds trade at a yield of around 10% at the moment, and the Mintos loans have the additional benefit that they are directly secured on loans that have cars as direct loan collateral (as well as a buyback guarantee). We also like loans that have a strong payment history, and this borrower has already made 15 consecutive monthly payments.
Interest rate: 15%
Term: 12 Months
First Lien mortgage
Sometimes we highlight here loans that sold out almost instantly when they went live. We do this to highlight the types of opportunities that are available on certain sites that can offer good opportunities, but require you to be quick to receive an allocation. This is one of those types of loans. The security for the loan is two decent quality properties located in Latvia. Bulkestate always uses well known, reputable valuation firms and usually has conservative LTVs. This is a good example of what can be found on Bulkestate – a high yield of 15%, a conservative LTV at 59%, and a fairly short duration of 12 months. We think that is a pretty strong combination. Bulkestate has also been increasing the availability of loans recently, so it is worth opening an account and waiting for good deals like this to come along.
Interest rate: 11%
Term: 18 Months
First Lien mortgage
This loan from Estateguru is secured on a boutique hotel and restaurant located in a national park near Tallinn, Estonia. Estateguru reports that is has high occupancy and we can see that it has many customer reviews, with overall good ratings on the site Booking.com. We often dislike loans secured on commercial property as they can be difficult to value and assess the potential demand if the collateral is foreclosed. However we are relatively comfortable with assets like this, which we believe are not too difficult to value accurately and where there would be good demand if it were put up for sale. At a 47% LTV, and an 11% interest rate, it represents a good yield for fairly modest risk.
Interest rate: 7%
LTV: 25-40% Tranche
Term: 12 Months
First Lien mortgage, Tranche 2
We don’t normally like loans that are secured on high value residential real estate. They can be less liquid, and more difficult to value. However, this property (£2.1m valuation) is located in Maidenhead (near Heathrow, London) and the area is going to benefit from a new Crossrail trainline into central London that opens soon. This property also has a river-front location with a boat mooring which makes it very attractive to potential buyers. This loan has been tranched by Kuflink and we think Tranche 2, with an LTV range of 25-40% and an interest rate of 7% is the most interesting one. Kuflink also provides a 5% additional ‘first loss’ protection on this loan, which should make it ‘Brexit-proof’ unless things get very, very bad….
'Dorney Reach' Loan
Interest rate: 9.6%
Term: 9 months
1st lien mortgage
This is the type of super-boring (but attractive) bridge loans that Bridgecrowd excels at. This property is being renovated and the owner requires funds to complete this. An interest rate of almost 10%, good quality collateral, first lien mortgage security and an LTV of only 55% makes this one of the best UK P2P loans at the moment. We also like that several similar properties have sold nearby recently, which gives us extra confidence in the valuation provided. The one downside of Bridgecrowd is that the minimum investment in each loan is £5,000, so it suits investors with larger sums available to invest.
'Church Road' loan
And here is one we DON'T love....
Interest rate: 20.5%
Term: 2 years
Unsecured corporate loan
This huge (€850k) loan to ‘Alborg Petrol’ is listed on new P2P site Kuetzal. Unfortunately, absolutely nothing about the loan, or the company makes any sense to us at all. This loan, is supposedly for ‘strategical [sic] upstream, midstream, downstream assets to create a platform for international expansion’. So many questions here….. Firstly what is the financial position of the company (see our post ‘Are you the dumb money’?). No financial information is provided. How can it make sense for a company to borrow money at 20% interest to operate low margin petroleum assets? Why are there no employees listed on linkedin? If this business really owns pipelines, refineries and terminals why is there no mention of this anywhere other than the company’s own website? Does this company even exist?
If you are interested in any of the loans above, please make sure to read all the information provided by each investment site and make sure that they are suitable for you. While we aim to highlight interesting opportunities, you must perform your own assessment of the risks and make your own independent decision on whether these, or similar loans offered on each site are suitable for your investment objectives.
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